Bitcoin is having one of its lowest volatility medium-term periods in its history. I am bullish, but I am not so sure if we are going to see a shake out dump before a pump or if we are going up right away after this low volatility period is done. I go through both scenarios in this analysis. And also the third possible scenario that we are not inside a bullish paradigm after all.
I am bullish as long as the 2020 yearly open at $7160 on weekly chart holds, meaning that we do not see weekly close below that horizontal ray. The biggest margin call cascade in the history of bitcoin formed a huge V-bottom. Price has recovered from the $3.8k bottom close to the 2020 February top from where the drop (margin call cascade) started. After this the price has not retraced much but consolidated close to the top for almost 3 months. This is all bullish.
Now I can see a possibility for another smaller shake out, meaning that we see a smaller dump to $7k-8k before a longer trend starts continuing up and breaking the important $10.5k level. If the market has a lot of long positions now that would be possibly wiped out during this kind of down move.
Breaking $10.5k would likely cause the price to accelerate up, 2018 yearly open at $13880 could be a big resistance again and cause a retrace in this case.
Chart starts to look bearish for the longer term if the weekly bar closes below the blue dotted moving average from 100 weeks and the 2020 yearly open at $7160. This would likely lead to another down move below the red dotted moving average from 200 weeks. In my opinion this is the least likely scenario to happen from these three scenarios in this analysis. The recovery from the margin call cascade back above the 2020 yearly and moving averages, as well as back inside the $7k to $10k range is too bullish for this bearish scenario to be more likely.
This covid fear has been a perfect environment for the market to do this kind of ‘bear trap’ where the price initially crashed hard and made traders and investors panic, but then recovered so fast that many probably did not want to buy back in. The market wiped the longs and didn’t give an easy opportunity to get them back.
This was my bitcoin market analysis #130 in the span of almost six years.